Articles Published in: October 2016

October 21, 2016

Mortgage Rate Trends: Recovering

Mortgage rate watchers were paying close attention on Thursday to see what the European Central Bank (ECB) might announce that could influence investor behavior in markets affecting mortgage interest rates. Fears of higher rates on Thursday were out to rest (for now) thanks to the ECB’s lack of movement on tapering off the European version of quantitative easing or QE. Our sources point to this as a big reason Thursday could have been another “spoiler” day for rates in the short term. To be sure, the ECB isn’t the only thing that has the potential to affect rates, but it was the biggest thing to watch on Thursday. QE and the Fed’s handling of it was responsible for influencing many ups and downs in the U.S. a few years ago. | more...

October 20, 2016

FHA Refinance Loans: 10 Things To Know

By Joe Wallace

If you are considering your options with an FHA refinance loan, here are ten tips to help you decide which type of refinancing is right for you. FHA Refinancing For Non-FHA Loans Borrowers do not have to be in an FHA mortgage loan already to be eligible for certain types of FHA refinance loans. Your VA loan, conventional, even sub-prime mortgages may be able to be refinanced into an FHA loan. FHA refinance loans feature cash-out and non-cash out options for existing FHA and non-FHA mortgages. Refinancing And Repairs Your FHA refinance loan options include rehab/repair loans under the 203 program. FHA 203(k) and 203(h) mortgages have long been a part of the FHA loan options available from participating lenders. If your home has been damaged in a natural disaster, | more...

October 20, 2016

FHA Requirements, Occupancy, and Business Loans

By Bruce Reichstein

Here’s an example of a question we get fairly often about the intended purposes of FHA mortgages: “I am interested in investing in properties I intend to flip and rent out. I already own a primary residence, can I use a FHA loan to buy a second home for business? FHA loan rules are specific when it comes to flipping a home, starting with the FHA’s definition of the practice as found in HUD 4000.1: “Property Flipping is indicative of a practice whereby recently acquired Property is resold for a considerable profit with an artificially inflated value, often abetted by a Mortgagees collusion with an Appraiser…Property Flipping refers to the purchase and subsequent resale of a Property in a short period of time..” We are not implying that the reader | more...

October 19, 2016

Mortgage Payments On FHA Loans: How Much?

By Joe Wallace

One of the most common questions about FHA mortgage payments is naturally, “How much will I have to pay?” And the answer is not as easy as you might think since there are a variety of factors that go into calculating the monthly mortgage payment. FHA loan limits, the amount of the loan the FHA will insure, don’t include the Up Front Mortgage Insurance Premium (UFMIP), for example. So you can’t simply divide the amount of your loan limit and divide by the number of mortgage payments you plan to make. In addition to UFMIP, there are other things to consider. For example, is the borrower planning on an FHA Energy Efficient Mortgage (EEM)? This option allows the addition of extra funds for approved upgrades or improvements to the home, | more...

October 19, 2016

Mortgage Interest Rates Recover Slightly

By Joe Wallace

Interest rates for mortgage loans improved in a small way for the second day after a prolonged “losing streak” that managed to push conventional loans out of a a previous range and into a single, higher number and FHA mortgage loan interest rates out of their single-number best execution territory. 30-year fixed rate conventional mortgages are, best execution, at or near 3.625%, with their previous range being (depending on the lender) between 3.5% and 3.625%. FHA mortgage loan rates are now in a range between 3.25% and 3.5% best execution at the time of this writing. Best execution rates listed here assume ideal conditions including an extremely well-qualified borrower with outstanding FICO scores and loan repayment/credit history. Your experience may vary, and best execution rates are not available to all | more...

October 18, 2016

Appraisals: FHA Loans and MPR Rules

By Joe Wallace

We get many questions about FHA appraisals, and there are some critical issues to keep in mind when considering this mandatory part of the FHA loan process. A home to be purchased with an FHA mortgage loan must pass an FHA appraisal, which is intended strictly to assess the fair market value of the home and insure the property meets FHA minimum standards. Note the use of the use of the word, “minimum”. Appraisals are NOT intended as INSPECTIONS of the property. A home that passes an FHA appraisal is not guaranteed to be free of problems, and the FHA makes it clear that borrowers should not accept the appraisal as any sort of stamp of FHA approval. In all cases, a borrower purchasing a home with an FHA mortgage | more...

October 18, 2016

Employment and Income Requirements For FHA Mortgages

By Joe Wallace

A reader asks, “I am a working part time. My annual income is 14,400. I work only 8 hrs a week. I have a savings of $30000. Will I be eligible to get a house loan of $76000? I have a very good credit score. I am working in the current place for past 8 months. I had a full time job before.” FHA loan rules do not specify a minimum or maximum income that makes a borrower eligible for an FHA mortgage loan. What the loan rules DO require is that the income a borrower has be verifiable, reliable, and likely to continue. The lender will have to make a judgment call on whether the borrower’s income meets this criteria. Another important factor in FHA loan approval is the | more...

When Is An FHA Loan Better Than A Conventional Loan?

October 17, 2016

Residency And Occupancy: FHA Loan Rules

By Bruce Reichstein

FHA loan rules have requirements for both U.S. residency for potential borrowers, and occupancy for approved borrowers. Did you know that HUD 4000.1 states that an FHA loan applicant does not have to be a U.S. citizen in order to apply for an FHA mortgage or refinance loan? U.S. citizenship is not required, but legal documentation showing the applicant’s status will be a condition of loan approval. The FHA loan program is open to both non-permanent resident aliens and lawful permanent resident aliens. The FHA loan rules also instruct the lender, “Non-U.S. citizens without lawful residency in the U.S. are not eligible for FHA-insured Mortgages”. While all borrowers are required to show proof of a Social Security Number, this cannot be used to prove immigration or work status, according to | more...

October 17, 2016

Mortgage Loan Rates: Friday Bounce

By Joe Wallace

In our last report, we noted that mortgage loan rates had made some improvement, but the very next day we saw rates bouncing to highs not seen in several months-a move that not only affected conventional mortgages, but also served to push FHA mortgage loan interest rates out of their long-held comfort zone and into a new range. Some market watchers noted that the move higher didn’t begin until later in the day on Friday, which could have resulted in some lenders failing to change or “reprice” on that day. Depending on how things go on Monday, that could mean higher numbers for some lenders who didn’t reprice already. That means those contemplating their options when it comes to locking in a mortgage loan interest rate commitment with their lender | more...

October 14, 2016

Mortgage Rate Trends: Recovery

By Joe Wallace

After ten days of no improvement, upward pressure on interest rates finally broke on Thursday, but some market watchers are not ready to declare that day’s respite from higher numbers a decisive victory. In fact, some say this could be a resting moment before rates continue to push upward. Some industry professionals are using the word “lock” quite a bit in public statements aimed at those who haven’t yet made an interest rate lock commitment with their lenders and are within a month to two months of closing. It’s hard to argue with their logic, and rates have been low for quite some time. Is the current trend just a short term development or do we have a new range of rates to look forward to in the coming months? | more...